Goldman Capitulates On Long EURUSD Call

Just when it seemed that Goldman's all time unbest sell side analyst, FX "guru" Thomas Stolper, may actually have a strike at bat with his long suffereing EURUSD call which has had a worse Sharpe ratio than even John Paulson's hedge fund over the past 12 months, we are sad to inform our readers that Stolper is and continues to be the perfect contrarian signal (pari passu with that other all time fade: Barton "Notorious" Biggs) with a 0.000 statistical average (which, as everyone knows, is just as valuable as a 1.000). Because just as we predicted earlier today, when we said that "Goldman is about to announce it was just stopped out on its 1.55 EURUSD "tactical" trade", Goldman has just announced that it was "Stopped out of long EUR/$." Something tells us the slow money will not be happy to read this when they roll into the office between 10 am and 1 pm tomorrow.

Trade Update : Stopped out of long EUR/$


Having traded for a while quite closely to our stop, our long EUR/$ recommendation has finally been stopped out for a theoretical loss of 4.2% including carry.


We recommended this idea on the back of two main assumptions: continued Dollar downside pressure and a gradual decline in the fiscal risk premium in the Eurozone. The latter has obviously been rising in recent months, but at the same time Dollar downside pressures also intensified through July and August as illustrated by very weak BBoP data in recent months. As a result, EUR/$ remained range bound for most of the summer. However, the recent sharp increase in risk aversion, much of this originating in Europe, and upward pressure on the USD across a wide range of currencies lately, has pushed the cross below our 1.35 closing stop.

The simple take home: never, ever bet, against betting against Goldman Sachs. Ever.


No comments yet! Be the first to add yours.